Understanding China’s Social Credit System

“Let there be benefits everywhere for the trustworthy, and for the untrustworthy restrictions with every step.”Li Keqiang, State Council Premier

Last update: August 27, 2019

In 2014, China’s State Council released a landmark policy announcing the establishment of a national social credit system (SCS), an initiative designed to “promote the traditional value of integrity” and increase the negative consequences of dishonest behavior. While the international community is fixated on the SCS as it relates to citizens, in actuality, the system isn’t just directed at individuals, but rather has three distinct and equally-important targets: citizens, businesses, and the Chinese government itself.

Many have voiced concern about the system’s potential to evolve into an Orwellian panopticon of social control. While that’s a valid worry, it’s also a skewed and incomplete picture of what the SCS is designed to do.

As we’ll see over the following pages, the SCS was created first and foremost as a tool for controlling corporate behavior (both for domestic companies and foreign companies doing business in China), second as a mechanism for evaluating the “creditworthiness” of individuals from both a financial and behavioral perspective, and third for solidifying Party control over the State.

The SCS, which is slated to be fully operational by the end of 2020, is made up of three interconnected components:

A master database

A blacklisting system

A punishment and rewards system

The central government hopes to use these three components in tandem to guide China through its next phase of development. Of course, in order to achieve such a sweeping goal, the government needs data. Lots and lots of data.